Tula Connell

Airbus Deal A Slap in the Face to America’s Middle Class

The U.S. economy is in the worst shape it's been since the Depression: Home foreclosures are skyrocketing, family-supporting jobs harder to get and gas prices are the worst ever. The public has become increasingly pessimistic about the economy, with a majority now telling the Gallup Poll they are worse off financially than a year ago—the first time in the polling organization's 32-year history more than half of Americans give this sour assessment.

So when an opportunity comes along to award a $35 billion contract to a U.S. firm, one that would support at least 44,000 middle-income jobs, which in turn would expand purchasing power throughout communities in more than 40 states, the Bush administration leaps at the chance, right?

Not so. The U.S. Department of Defense in March rejected a proposal by the Boeing Co. to build a new U.S. fleet of refueling tankers, giving the contract instead to EADS, which makes the Airbus, and its minority partner, Northrop Grumman.

Well, that must mean U.S. taxpayers will get a better deal with the foreign contract?

In fact, just the opposite will happen. A new report compiled by the International Federation of Professional and Technical Employees (IFPTE) highlights the corrupt bid-awarding process involved that not only shuts the door on job creation, but slams taxpayers with massive bills and creates a potentially less safe, less green jet fleet. IFPTE, which represents 85,000 white-collar engineers and technical employees across the nation, found the Boeing model could save taxpayers $90 billion over the program's lifetime.

Here are a few of the report's findings:

• The contract to EADS could cost U.S. taxpayers as much as $30 billion in unneeded costs.
• Known as the KC-30, the aircraft EADS is less capable, can land in fewer bases and is more vulnerable to being downed by enemy fire.
• The KC-30 is being financed with illegal subsidies, according to a near-unanimous consensus of legal experts in the United States and leaders of both political parties.
• The Defense Department made questionable midstream changes in the procurement criteria that it has not explained to Congress to date.
• EADS won exemptions from key national security laws, including those that restrict the export of sensitive military technologies developed with U.S. funds.
• EADS has very questionable relationships with Iran, Russia and others that should be of concern to policymakers tasked with protecting our national security.

Compared with the model Boeing would build, the EADS version produces 25 percent less carbon dioxide-reducing greenhouse gases and offers a 24 percent fuel savings—costs borne by taxpayers.

At a meeting in Everett, Wash., where more than 300 Boeing workers joined with the state's congressional delegation, Gov. Chris Gregoire (D) and other elected officials to call on the Air Force to take another look at its decision, Rep. Rick Larsen (D-Wash.) told the crowd the only way EADS operates is with subsidies the United States says are illegal. In fact, even as the $40 billion contract is being handed over, the federal government is aggressively pursuing legal action against EADS at the World Trade Organization for getting grants and loans at unfairly favorable rates.

The contract also raises national security issues. Workers at Boeing—members of the Machinists (IAM) and the Society of Professional Engineering Employees in Aerospace/IFPTE Local 2001—undergo security checks and rigorous background clearances. But it is unclear if the European workers, as well as immigrants who are hired to build the scattered parts of this crucial piece of military equipment prior to its final assembly, will be vetted in the same way.

No one is arguing that this decision should be made because of domestic economic considerations alone. But every sober analysis of the tanker award shows that after considerable lobbying by this foreign contractor, its minority U.S. partner, and Senator John McCain, the DoD buckled to their pressure and made decisions that will leave U.S. workers, taxpayers and soldiers out in the cold. We are confident that upon closer reflection, the Congress will reverse this ill-fated decision.

The Bush administration's support for giving the contract to EADS was urged in part by the senator from Arizona, John McCain. Published reports indicate McCain wrote to Deputy Secretary of Defense Gordon England and Secretary of Defense Robert Gates pushing for modifications and exemptions to the contract that allowed EADS to bypass restrictions that prevent domestic companies like Boeing from selling military technologies, such as missile defense systems, to enemy states like Iran.

Gregoire said awarding the tanker deal to EADS is one of the worst procurement decisions in recent history: The plane’s design is too big to fit in the hangers in which the National Guard houses the current tankers, meaning every single hanger will have to be rebuilt, she added.

Shoring up the nation's withering middle class will be a big task. But before that process can begin, there needs to be political will to do so. When the Bush administration has a chance to bolster communities, taxpayers and workers and the presumptive Republican presidential nominee turns it away, it's worse than a slap in the face to the nation's middle class.

(Send a message to your representatives in Congress, urging them to overturn this decision, by clicking here.)

All comments, ideas and thoughts on DMI Blog are property of their authors. Reasonable excerpts are permitted on other sites and blogs; otherwise reproduction without the author's permission is strictly prohibited. View our comment policy here.

All opinions expressed on the DMI Blog website are solely those of their authors, and do not necessarily reflect those of the Drum Major Institute for Public Policy.